Overview

Eastern Bank is a bank holding company that provides a range of banking and financial services primarily to retail, commercial, and small business customers. As of March 31, 2025, the company had total assets of $25.0 billion.

For the three months ended March 31, 2025, Eastern Bank reported a net loss of $217.7 million, compared to net income of $38.6 million for the same period in 2024. This decrease was primarily due to losses on sales of securities during the first quarter of 2025.

However, the company’s operating net income, which excludes certain non-core items, increased by 68.9% to $67.5 million for the first quarter of 2025, compared to $40.0 million in the first quarter of 2024. This increase was driven by higher net interest income, partially offset by higher noninterest expenses.

Banking Business

Eastern Bank’s core banking business involves attracting deposits and using those funds to originate loans and invest in securities. The company’s lending activities focus on commercial, residential, and consumer loans.

Commercial lending includes commercial and industrial loans, commercial real estate loans, commercial construction loans, and business banking loans. Residential lending includes mortgage loans on residential real estate. Consumer lending includes home equity loans and other consumer loans.

In addition to lending, Eastern Bank offers other banking products and services such as deposit accounts, treasury management, wealth management, and trust services.

Financial Performance

Net interest income, which is the difference between interest earned on loans and investments and interest paid on deposits and borrowings, increased by 45.4% to $188.9 million in the first quarter of 2025, compared to $129.9 million in the first quarter of 2024. This increase was due to higher average balances and yields on the loan portfolio, partially offset by higher deposit and borrowing costs.

The provision for loan losses, which represents the amount charged to expense to maintain an appropriate level of allowance for loan losses, decreased slightly to $6.6 million in the first quarter of 2025, compared to $7.5 million in the first quarter of 2024.

Noninterest income, which includes fees and other revenue from services, decreased significantly to a loss of $236.1 million in the first quarter of 2025, compared to income of $27.7 million in the first quarter of 2024. This decrease was primarily due to $269.6 million in losses on sales of securities during the first quarter of 2025.

Noninterest expense, which includes salaries, occupancy, and other operating costs, increased by 28.6% to $130.1 million in the first quarter of 2025, compared to $101.2 million in the first quarter of 2024. This increase was mainly due to higher salaries and employee benefits and increased amortization of intangible assets related to the company’s recent merger.

Asset Quality

Eastern Bank’s loan portfolio quality remains relatively strong, with non-performing loans (NPLs) decreasing to $91.6 million, or 0.51% of total loans, as of March 31, 2025, compared to $135.8 million, or 0.76% of total loans, as of December 31, 2024. This decrease was primarily due to the sale of one non-performing commercial and industrial loan and the transfer of another commercial real estate loan to held for sale during the first quarter of 2025.

The allowance for loan losses decreased to $224.3 million, or 1.25% of total loans, as of March 31, 2025, compared to $229.0 million, or 1.29% of total loans, as of December 31, 2024. This decrease was primarily due to a reduction in specific reserves related to the transfer of a non-performing commercial real estate loan to held-for-sale and the sale of a non-performing commercial and industrial loan.

Liquidity and Capital

Eastern Bank maintains a strong liquidity position, with cash and cash equivalents of $368.8 million and secured borrowing capacity of $4.6 billion as of March 31, 2025. These liquidity sources provided 74% coverage of all customer uninsured and uncollateralized deposits, which totaled $6.7 billion, or 32% of total deposits, as of March 31, 2025.

The company’s capital ratios remain well above regulatory well-capitalized thresholds, with a total risk-based capital ratio of 15.19% and a Tier 1 leverage ratio of 11.68% as of March 31, 2025.

Outlook and Trends

The Federal Reserve has been actively adjusting interest rates in response to economic conditions. Beginning in March 2022, the Federal Open Market Committee (FOMC) raised the federal funds rate multiple times, reaching a range of 4.25% to 4.50% as of the most recent meeting in May 2025. The FOMC has indicated it will continue to carefully assess incoming data and the evolving economic outlook in considering any further adjustments to interest rates.

Eastern Bank’s interest rate risk management strategy involves the use of interest rate derivatives, such as interest rate swaps, to hedge against the impact of rising or falling interest rates on its net interest income and economic value of equity. The company’s sensitivity analyses show that its net interest income and economic value of equity would decline in rising rate environments, but remain within the company’s internal policy limits.

Strengths and Weaknesses

Strengths:

• Diversified loan portfolio with a focus on commercial, residential, and consumer lending
• Strong asset quality with low levels of non-performing loans
• Robust liquidity position and well-capitalized balance sheet
• Experienced management team and established market presence in the Northeast

Weaknesses:

• Reliance on net interest income as the primary driver of profitability, which can be sensitive to changes in interest rates
• Recent losses on securities sales, which negatively impacted reported net income
• Increased noninterest expenses related to the company’s recent merger, which pressured operating margins

Outlook

Eastern Bank’s future performance will depend on its ability to navigate the evolving interest rate environment, effectively integrate its recent acquisitions, and continue to grow its core banking business while maintaining strong asset quality and operational efficiency.

The company’s sensitivity to changes in interest rates, as demonstrated by its net interest income and economic value of equity analyses, suggests that it may need to further refine its asset-liability management strategies to mitigate the impact of potential rate hikes or cuts. Successful integration of the Cambridge and HarborOne acquisitions will also be crucial, as the company seeks to realize expected revenue and expense synergies.

Overall, Eastern Bank appears to be a well-positioned regional bank with a diversified business model and a strong foundation. However, the company will need to carefully manage its interest rate risk, integration challenges, and operating expenses to deliver consistent, profitable growth in the years ahead.